Estate Planning Quiz

Due to the recent passing, unexpectedly, of a friend’s husband, here is an estate planning quiz. This is NOT estate TAX planning ($20MM exemptions, paying taxes, etc.) – it is purely just the “what happens when you die” stuff. (Wills, trusts, etc.)

This is super serious stuff y’all. It seems impossible and seems like a silly waste of time and money.


Be a grown-up, handle your shit, and don’t leave a mess for others to clean up after you.

Are you alive?

You need a Healthcare Directive and POA

Cool, no worries then

Are you married?

You need a Durable POA and a basic Living Trust & Will

Cool. You need at least a basic will.

Are you planning to get married?

Make sure to update whatever documents you already have


Do you have kids?

You need a more complete Living Trust & Will
(One that specifically addresses the guardianship of the kids and giving them money)

Lucky duck.

Do you have more than a $20MM Net Worth?

You might need Estate TAX planning – contact a professional

Yeah, me either.

Pour-Over Will
A will is a legal document that basically instructs the probate court how to divide up your stuff.
When you pass away your executor will take the will to the court and get an order from a judge to “do” things – things like transfer your bank account to someone else, move your investments to your spouse or kids, or distribute your life insurance to a charity of your choice.
This is a public record event, which means your assets and legacy will be recorded in the public court records of a probate court of your local area. In addition, it can take a long time (sometimes years) to settle everything. Because of these disadvantages wills by themselves are very unpopular. Instead, people use a living (or Revocable) trust. Paired with a living trust a common type of will, a “pour-over will” is popular. It basically is a will that says “anything I didn’t leave to my trust, I leave to my trust” and is a way to make sure anything that was accidentally not included is included in the trust.

Revocable Trust
Revocable Trusts are a broad classification of trust where the Trustee retains the powers to change trust provisions at will. Because of this, the items are generally considered to still be “yours”. For example, if you put an investment account in a revocable trust you’ll still pay taxes on your personal return on any gains in that accounts.
This is the set-up of most “Living Trusts” (a.k.a. Marital Trusts, Family Trusts, etc). So 97% of people who say they have a trust (that is a made-up number) are talking about these kinds of trusts, not capital “T” Trusts – who have “Trust Fund Kids” attached to them. That’s a totally different thing.
A Living trust is just a legal document that lets you decide where your stuff goes and how it should be paid out. Most importantly it also allows you to give other more detailed directions about things besides money at your death. Most notably this would be where you could designate guardians for your kids.
In addition, a living trust can become Irrevocable at your death (since you are not alive to revoke or change anything anymore). This means that if you want to do anything besides just hand all the assets to a person – you need a trust, not a will. The most common example is minor children. Trusts are usually set up such that the money will be kept “in trust” while the kids are going through school or college and then distributed over their lifetime. Because of the flexibility you can “control from the grave” and help your kids out the same way you would have if you were alive. You can also designate different people to be guardians for your kids then who manage the money.

Healthcare Directive
A “catch all” term – generally refers to a specific kind of Power of Attorney or Will that gives specific instructions for medical care. This could include a “DNR” (Do Not Resuscitate) order, giving directions for how long to remain on life support, what forms of life support are acceptable, and what to do with your body after death.

Durable Power of Attorney
A document that gives someone else the legal authority to act on your behalf. Generally, a “durable” version is permanent (e.g. forever until removed) and covers all topics & decisions. But they can be drafted for time frames and/or specific topics or questions.
Generally done between spouses so there is a legal authority to act in the case of incapacity. But can be done with an attorney or accountant or other advisors to act as an agent on transactions or disputes.
Healthcare Power of Attorney: A specific kind of Power of Attorney that relates only to health care decisions.
Usually combined with a Health Care Directive.